world's largest i'm melissa lee. these are the traders here in times square. stocks rebounding. still feeling the pain from spain. there is only one stock that america seems to care about tonight and that is facebook. shares surging more than 6% after it announces it will move into the e-commerce space. is america's long national nightmare over? a game changer for facebook? >> not likely. here is the situation. the sentiment was so poor heading into the last few weeks and we saw the bounce it got off of zuckerburg's speech at the tech crunch and the way it sold off after bearish cover story. today these guys are so levered to desktop advertisinadvertisin today they introduce something where they are a gift giving

service where you do not have to leave facebook. there is one of the things that he has been suggesting that they can do to monetize. >> he did a very nice job when he gave that little speech. any kind of news could be observed as a real positive with a lot of revolog because they have so many users. they don't have to do a lot of o things right. this is a stock that trades at a high multiple. you are saying you have about a billion users out there. >> we don't know is the bottom line. >> this is a tiny step. they are going to allow people to send gifts. i like single malt scotch. if that is the totality of what they will do. if you are going to go public you ought to know how you are going to make money before you do that and not figure it out

afterwards. >> people might leave facebook and this is much more geared towards the mobile user. you don't tend to have many different programs up. you are not going to have facebook plus amazon and single malt scotch.com. you will have one thing up. if that is facebook and that person can spend more time on facebook that is more opportunity to monetize. >> think about the four inch smart phone devices. they are keeping you on their app. you are not going to go to amazon's app. it is the right step for a company that hasn't given a lot of plans about how they plan to make money. >> here is the gift that keeps giving, the supply of stock that is for sale. that is really the head wind that you also have to pay attention to regardless of how you hand copy the success they might have. >> i think people will still go to amazon to compare prices if nothing else. >> 1.2 billion shares come into market in november.

when you are bullish on facebook is this a very short term and a long term? what is this? >> i think it is so bad that at some point between now and the end of the year the stock is going to bottom. i think there could be a dogs in the down sort of play as fresh investors take a look at it. you have to be cognizant of the shares coming in november. we will talk about a structure where you can get some of your money back without using a lot more risk. >> let's talk about this trade. it is a trade on facebook that costs nothing but offers huge leverage. he is doing a 1 by 2 call spread. you buy a call and buy two higher price call. it is also where your stock gets called away. since you are short more than long you do this against stocks.

>> if i'm long a stock i don't want to add to it but i want to do an override. i want to look to january and buy the january 24.27 call spread. when i call that up i buy one of the jan calls for 1.70 and sold two for a total of $1.70. that structure costs me nothing. against my long i'm covered. i'm not net short win of those options. between 24 and 27 i make all the gains in my stock but make up to $3 in profits. if it is 27 or hi it is called away. i have the risk to the down side as i would with the stock. i cap my gains at basically $30. that's up 37% from here in three months. >> one of the most common questions i get is i bought stock higher and now it is

lower. what do i do to make my money back? you get to make the money back without the stock going back to the level you bought it because you are levering the gains between the strikes. we call this a recovery trade. i think it is a great recovery trade for people in this situation. very frequently when stocks come in there is going to be resistance at some of the intermediate points. you may not get the chance to sell it at the level you bought it. >> does anybody buy it that people will be looking at the under performers of this year and going into next year they will want to put money to work in a name like facebook? >> facebook is kind of the story. you have to believe in the story and the business and the way forward but i think mike is right in that this is one of the best rehab strategies that you can find. this is better than covered calls. the math is against you a little bit but sometimes you have to know when to break the rules.

you get lever to the upside and not the down side. that doesn't mean the stock can't go down from here and the options aren't helping you at all. >> some people were hoping that facebook would add stocks versus options to the platform. that would be a way to monetize mobile. want to double down? 100 shares will cost you nearly $2,200. the one by two call spread doesn't cost a dime. he does offer huge leverage to the upside. be sure to tune in on monday. julia boorstin speaks to cheryl sandberg. is it going to be there or not going to be there? the other big story this week has been the volatile moves in crude. oil has lost nearly 7%. that is whack shares of oil.

according to our next guest created a crude opportunity for halliburton. let's call to the charge with the always slick. you have u.n. and wet traffic but managed to come here. >> i have several charts. let's start with crude. this is a long term picture of crude. you had the epic run up. what is happening is you have a well defined series. you are into a wedge meaning if you think the world is slowing down and crisis and all of this thing and europe is cracking up you bet down. if you think global growth will maintain and come out of it you bet up. the point is we have reached a point of. look at the disconnect at this point.

now at the next chart i want to show you one of the most high beta stocks within the group. we have crude versus the oil service groups. you have quite a bit of lag here. if you think crude will go up a beta way to play is halliburton. if you think it is down we think halliburton is discounting it not moving. two charts i think tell the story. the next chart will juxtapose where we are now in relation to where we have been. we have well defined a down trend. that is very, very important. the second chart that looks at halliburton is the same time frame. i include the moving mechanism. when that starts to slow that is the beginning of a bearish to bullish reversal. we like halliburton. >> if you just took a look at the chart of halliburton

independent of the chart of crude you say halliburton has the upside? >> if you are interested in beta this is where you get it. >> i think that is probably the most important one to make because the market has rallied sharply. if you think you missed the opportunity because it lifted it hasn't. the service names have not performed so well. year. k halliburton is down on the stock is cheap on a fundamental basis. we are expecting to see probably about 15% or 16% revenue growth year on year. this stock could be poised to move. you have to be willing to overcome concerns about the global economy. >> mike is bullish when he comes to halliburton. he is simply buying a call. let's open that play book once again for those. this is a bullish strategy. when you buy a call you want the stock to rise by more than the

cost of the trade. that is all it takes. easy pizzey. anything below that level you will see losses by expiration. >> so very simply i am looking to buy the january 36 calls. this is a simple trade because if you buy these things you only need to run through that strike by the amount of premium you are paying. the other thing is i indicated some concern about the economic data we have been getting. much of it has been that good. we have been talking about how good it has been for stock prices but not for the results of the companies. >> what do you think of the trade? >> i don't mind it. i look at crude in the weakness as a proxy for global growth. i think if you are going to play the beta trade i think you buy the calls. they are cheap. >> he is buying a longer data call. >> one more time. want to buy halliburton with the

smoothing mechanism 100 shares will cost you more than 3,3$3,3 got a question send us an e-mail. we'll answer it in the one-on-one web action right after the show. you have trade updates there as well as options blogs. we want you to check it ut. [ male announcer ] the markets keep moving.

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time for total recall when you take a look back at trades that are neither winning nor losing. the wonder twins after initially winning the trade has moved against them. they haven't lost money and here is why. >> on "options action" it is just how we do it. risk less so we can make more. that is just what carter did with the marriage trade on nike.

that puts strike price by more than the cost of the trade or below $90.70 by october expiration. paying 1.80 we are not trying to send olympic size sums of money here. >> sell the september weekly put. >> well done. to spend less mike sold the september weekly put for $1.05 and created his put calendar. he also made making money easier and here is how. between the put and the $1.05 mike reduced the cost to just .75 mike can see profits below the strike of the longer dated put by more than the .75 on the trade. >> it's great.

>> it sure is. but it gets better. that's because the value of the put will decrease faster than the value that he thought allowing mike to do something only mr. bolt can't do, turn time into money. >> the reason i came here was to show the world that i'm the best. >> relax because there is a tradeoff. in order to make the most money mike needs nike stock to stay just above the put he sold by the first expiration or in this case above 92.50 but below the put he is long by the second expiration by more than the cost of the trade or in this case beloam $91.75. >> since the time of the trade -- >> well, it was. after initially falling nike shares rally to finish flat leaving carter with a tough choice, clean up the trade or hope nike trades resume the

fall. now these are in a race against time and the options fans want to know one thing, what will these two do next. >> before we answer that you might be thinking if mike was so bear ish why didn't he buy the october put? time for options versus options where we drill down on why the strategies work for you. if mike bought the put he would be looking at a loss of 55%. because he sold the put against it which expired worse he was able to offset the loss and is looking at a flat trade. the question is he going to stay in? our own olympian of technical analysis. >> i think we are going to stay. >> this is really interesting this is a short dated trade. we need to manage these things carefully. this trade was up quite a lot earlier today. we sent out a tweet and said if we have it on you might want to

take it off. when you get into these types of trades you have it at your short strike on the day of expiration. that is when you cover the trade. that is actually what probably in the trade would have decided to do. i am inclined to be bearish. >> it is interesting the impact that nike's results had on a china. mcdonald's was downgraded and the nike news to contend with. >> the growth is coming from china. 45% of the sales come from china. to me we put a trade on the show about a month ago. i bought an october 62.5. the stock is at 66. to me the company reports. this is something i want to stick with. nike had been battered on this news. they missed last quarter here. i'm interested to hear what they have to say here. that stock closed worse today.

>> on the trade i think the nike trade the interesting thing here is the nature changes fundamentally. people love to trade because it is so tied to china. that is good and bad. china can be opaque and the bad is what we have seen in yum lately. >> if you want updates on our trades because things happen real time mike updated his trade this morning be sure to follow us on twitter and dan posts updates of his trades on twitter. if you are on facebook stay posted throughout the week at facebook.com/optionsaction. got the final call from the options pits next. [ male announcer ] the markets keep moving.

make sure the news keeps coming with thinkorswim by td ameritrade. use the news links breaking stories with possible breakout stocks, options with potential opportunity, futures and forex with in-depth analysis. it's an all-you-can-eat buffet for all things trading. thinkorswim by td ameritrade. it doesn't just deliver news. it's making news. trade commission free for 60 days, plus get up to $600 when you open an account.

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the sailors from the third naval command performing the popular gangnam dance. set a guinness world record for the most likes on youtube. it took the navy three days to film and edit their version. it was shown at the annual party posted on youtube this week. our own version will appear on our facebook page. did you guys knowt that? >> what happened to "call me maybe"? >> from optional viewing to much see web tv if you like options actions and you are looking to get into future trading futures starts tuesday 1:00 p.m. eastern time on cnbc.com. and it is entirely dedicated to teaching you how to trade futures. they have got it covered.

it is a ground breaking effort and the fun begins next tuesday. i will definitely be logged in. you were once a future's trader. >> i traded energy futures. i think it is really important to focus on the future's market because there is a wide world of tradeable instruments. >> time for the final call. >> this week's web extra is how to buy protection on the s&p. >> you're long facebook. >> a nice way to make a bullish play in halliburton is to buy the calls. >> looks like our time has expired. for more "options action" go to our website. we will see you back here next friday. right after this break money in motion is up. [ male announcer ] the markets keep moving.

make sure the news keeps coming with thinkorswim by td ameritrade. use the news links breaking stories with possible breakout stocks, options with potential opportunity, futures and forex with in-depth analysis. it's an all-you-can-eat buffet for all things trading. thinkorswim by td ameritrade. it doesn't just deliver news. it's making news. trade commission free for 60 days, plus get up to $600 when you open an account. like a high-speed train.

and you don't want to miss it with thinkorswim by td ameritrade. you get knock-your-socks-off tools, simple one-click orders, real-time paper trading to hone your skills, plus anytime you need it support.

♪ stocks, options, futures, and forex. get your trading on track. thinkorswim by td ameritrade. trade commission free for 60 days, plus get up to $600 when you open an account. stories that can make you money next week. protests are back in spain. sean egan will break down what lies ahead. find out why next week could be a golden opportunity to make a play on china. find out what to watch for. it is one of the most crucial jobs reports of the year with the election weeks away will the numbers deliver? live from the nasdaq market site this is